AFP: The head of Iran's central bank is at loggerheads with President Mahmoud Ahmadinejad over interest rates, the local press reported on Thursday, the latest criticism of his economic policies.
TEHRAN (AFP) — The head of Iran's central bank is at loggerheads with President Mahmoud Ahmadinejad over interest rates, the local press reported on Thursday, the latest criticism of his economic policies.
Central Bank of Iran governor Tahmasb Mazaheri has lashed out at Ahmadinejad's decision announced on Tuesday to arbitrarily set bank rates at between 10 and 12 percent, well below inflation.
And there are rumours that Mazaheri would resign because of the row, following on the departure of former economy minister in April who had protested at "unscientific" government policies.
"The 10 percent interest rate cannot be imposed," Mazaheri was quoted as saying by the Sarmayeh newspaper. "We hold a different position to the president."
Mazaheri has been arguing for a rate hike in a bid to stem a lending spree that many economists blame for helping to fuel rampant inflation, currently running at more than 24 percent.
Last May, Ahmadinejad slashed bank interest rates to 12 percent from between 14 and 17 percent, a move that also sparked criticism.
"The central bank package was examined by the government's economic commission… but they have prepared their own package which has obvious differences and contradictions with the CBI package," Mazaheri said.
Mazaheri took over as governor after Ebrahim Sheibani resigned in August 2007 over differences with Ahmadinejad.
Ahmadinejad, whose four-year term in office ends in 2009, has vowed to distribute Iran's oil riches more evenly, but his government has presided over a period of rising inflation and continued unemployment.